“Everywhere we went, people treated energy availability as a given,” Rui Ma wrote on X after returning from a recent tour of China’s AI hubs. 

For American AI researchers, that’s almost unimaginable. In the U.S., surging AI demand is colliding with a fragile power grid, the kind of extreme bottleneck that Goldman Sachs warns could severely choke the industry’s growth.

In China, Ma continued, it’s considered a “solved problem.”

Ma, a renowned expert in Chinese technology and founder of the media company Tech Buzz China, took her team on the road to get a firsthand look at the country’s AI advancements. She told Fortune that while she isn’t an energy export, she attended enough meetings and talked to enough insiders to come away with a conclusion that should send chills down the spine of Silicon Valley: in China, building enough power for data centers is no longer up for debate.

“This is a stark contrast to the U.S., where AI growth is increasingly tied to debates over data center power consumption and grid limitations,” she wrote on X.

The stakes are difficult to overstate. Data center building is the foundation of AI advancement, and spending on new centers now displaces consumer spending in terms of impact to U.S. GDP—that’s concerning since consumer spending is generally two-thirds of the pie. McKinsey projects that between 2025 and 2030, companies worldwide will need to invest $6.7 trillion into new data center capacity to keep up with AI’s strain. 

In a recent research note, Stifel Nicolaus warned of a looming correction to the S&P 500, since it forecasts this data-center capex boom to be a one-off build-out of infrastructure, while consumer spending is clearly on the wane.

However, the clear limiting factor to the U.S.’s data center infrastructure development, according to a Deloitte industry survey, is stress on the power grid. Cities’ power grids are so weak that some companies are just building their own power plants rather than relying on existing grids. The public is growing increasingly frustrated over increasing energy bills – in Ohio, the electricity bill for a typical household has increased at least $15 this summer from the data centers – while energy companies prepare for a sea-change of surging demand. 

Goldman Sachs frames the crisis simply: “AI’s insatiable power demand is outpacing the grid’s decade-long development cycles, creating a critical bottleneck.” 

Meanwhile, David Fishman, a Chinese electricity expert who has spent years tracking their energy development, told Fortune that in China, electricity isn’t even a question. On average, China adds more electricity demand than the entire annual consumption of Germany, every single year. Whole rural provinces are blanketed in rooftop solar, with one province matching the entirety of India’s electricity supply. 

“U.S. policymakers should be hoping China stays a competitor and not an aggressor,” Fishman said. “Because right now they can’t compete effectively on the energy infrastructure front.”

China has an oversupply of electricty

China’s quiet electricity dominance, Fishman explained, is the result of decades of deliberate overbuilding and investment in every layer of the power sector, from generation to transmission to next-generation nuclear.

The country’s reserve margin has never dipped below 80%–100% nationwide, meaning it has consistently maintained at least twice the capacity it needs, Fishman said. They have so much available space that instead of seeing AI data centers as a threat to grid stability, China treats them as a convenient way to “soak up oversupply,” he added.

That level of cushion is unthinkable in the United States, where regional grids typically operate with a 15% reserve margin and sometimes less, particularly during extreme weather, Fishman said. In places like California or Texas, officials often issue warnings about red-flag conditions when demand is projected to strain the system. This leaves little room to absorb the rapid load increases AI infrastructure requires, Fishman ntoed. 

The gap in readiness is stark: while the U.S. is already experiencing political and economic fights over whether the grid can keep up, China is operating from a position of abundance.

Even if AI demand in China grows so quickly renewable projects can’t keep pace, Fishman said, the country can tap idle coal plants to bridge the gap while building more sustainable sources. “It’s not preferable,” he admitted, “but it’s doable.”

By contrast, the U.S. would have to scramble to bring on new generation capacity, often facing years-long permitting delays, local opposition, and fragmented market rules, he said. 

Structural governance differences

Underpinning the hardware advantage is a difference in governance. In China, energy planning is coordinated by long-term, technocratic policy that defines the market’s rules before investments are made, Fishman said. This model ensures infrastructure buildout happens in anticipation of demand, not in reaction to it.

“They’re set up to hit grand slams,” Fishman noted. “The U.S., at best, can get on base.”

In the U.S., large-scale infrastructure projects depend heavily on private investment, but most investors expect a return within three to five years: far too short for power projects that can take a decade to build and pay off.

“Capital is really biased toward shorter-term returns,” he said, noting Silicon Valley has funneled billions into “the nth iteration of software-as-a-service” while energy projects fight for funding. 

In China, by contrast, the state directs money toward strategic sectors in advance of demand, accepting not every project will succeed but ensuring the capacity is in place when it’s needed. Without public financing to de-risk long-term bets, he argued, the U.S. political and economic system is simply not set up to build the grid of the future.

Cultural attitudes reinforce this approach. In China, renewables are framed as a cornerstone of the economy because they make sense economically and strategically, not because they carry moral weight. Coal use isn’t cast as a sign of villainy, as it would be among some circles in the U.S. –  it’s simply seen as outdated. This pragmatic framing, Fishman argued, allows policymakers to focus on efficiency and results rather than political battles.

For Fishman, the takeaway is blunt. Without a dramatic shift in how the U.S. builds and funds its energy infrastructure, China’s lead will only widen.

“The gap in capability is only going to continue to become more obvious — and grow in the coming years,” he said.

This story was originally featured on Fortune.com

© Yin Tianjie/Xinhua via Getty Images

On one sweltering summer afternoon in June, thunderstorms rolled over Boston Logan International Airport. It was the kind of brief, predictable summer squall that East Coasters have learned to ignore, but within hours, the airport completely shut down. Every departure was grounded, and flyers waited hours before they could get on their scheduled flights.

Among those stranded were Maxwell Tabarrok’s parents, in town to help move him into Harvard Business School, where he is completing an economics PhD. Tabarrok told Fortune he was fascinated by how an entire airport could grind to a halt, not because of some catastrophic event, but due to a predictable hiccup rippling through an overstretched system. 

So, he did what any good statistician would: dive into the data. After analyzing over 30 years—and 100 gigabytes—of Bureau of Transportation Statistics data, he found out his parents’ situation wasn’t bad luck: Long delays of three hours or more are now four times more common than they were 30 years ago. 

Not only that, but Tabarrok found airlines are trying to hide the delays by “padding” the flight times—adding, on average, 20 extra minutes to schedules so a flight that hasn’t gotten any faster still counts as “on time.” Thus, on paper, the on-time performance metrics have improved since 1987, even as actual travel times have gotten longer. 

“For 15 years, from 1987 to 2000, the actual and scheduled times stayed very close together,” Tabarrok said. “Then, starting right around 2000, they started diverging—a pretty clear sign airlines made a decision to start padding their schedules to avoid shorter delays.”

The padding carries a hidden economic cost. Using average U.S. wage data, the extra minutes built into flights add up to roughly $6 billion in lost passenger time annually, the researcher calculated. 

There are far more users in the National Airspace system today than there were decades ago, industry sources say. U.S. Department of Transportation data shows weather is the most common cause of non-airline delays.  An ongoing shortage of air traffic controllers, combined with recent FAA equipment outages, has also disrupted operations worldwide. 

A structurally unsound system

For Tabarrok, the root of the problem isn’t just bad weather, outdated infrastructure, or even airline strategy: It’s incentives. He argues the FAA has little reason to respond quickly to rising delays because the agency doesn’t bear the cost of stranded passengers, nor are they rewarded when airports run smoothly.

“I think the costs of delays can double, triple, quadruple over the next 10 years. But is anyone’s career negatively affected at the FAA? Probably not,” Tabarrok said.

He pointed to the shortage of air traffic controllers as an example. Hiring and training more staff would ease congestion and reduce cascading delays—a very simple solution that many people have called for. However, doing so requires sustained effort and leadership that is actually willing to push through bureaucratic inertia.

“You need somebody at the FAA who really cares about improving service. That’s not so easy to do because there’s really no incentive for somebody at the FAA to care a lot about this… they don’t get paid more,” Tabarrok said. “They don’t really get rewarded at all.” 

A FAA spokesperson told Fortune the organization prioritizes safety, which sometimes necessitates delays. They pointed to a chart showing the top five causes of delays—with weather being “by far” the largest cause. They declined to answer questions about airlines padding schedules and incentives to improve airport quality.  

Expanding airport capacity, for Tabarrok, is the most obvious long-term solution to reduce the cascading delays. But the U.S. hasn’t opened a major commercial airport since Denver International in 1995, and runway construction at existing hubs has been minimal, he said. Passenger traffic, meanwhile, has grown by about 50% since 2000, meaning more travelers are concentrated in the same physical space.

While we have built larger aircrafts to help carriers move more people, that’s also created new bottlenecks, he added. Bigger planes take longer to fly at every turn. They take longer to board, unload, and turn around at the gate, so the disruption continues to ripple into the schedule.

“The infrastructure at airports is fixed, especially season to season,” Tabarrok said. “So when you have more demand with fixed infrastructure, there’s going to be more delays.”

‘Pessimistic story’

Further, Tabarrok argued big-ticket fixes like building a new airport or runways face environmental reviews and legal challenges that can drag on for a decade. 

That leaves staffing as the most realistic solution, but even that will require changing how the FAA recruits, licenses, and trains controllers.

“It’s kind of a pessimistic story,” Tabarrok said. “We have these two constraints that aren’t that responsive to the market pressures of people’s demand for more reliable travel, and they’ve been around for a long time.” 

Without those changes, Tabarrok predicts the U.S. will be locked into a cycle where every summer thunderstorm or mechanical hiccup crashes airports and wastes millions of hours of Americans’ lives.

“If you just do some rough estimation of the value of people’s time, multiplied by how much time they’re spending waiting around in airports or waiting around for delays, you can easily get billions of dollars lost every year.” Tabarrok said. “And that cost will keep growing.”

This story was originally featured on Fortune.com

© Getty Images—Jeffrey Greenberg/Universal Images Group

After 133 years, a bankruptcy, and multiple reinventions, Kodak’s latest snapshot is grim: The company says there’s “substantial doubt” it can stay in business.

In a quarterly filing released Monday alongside its second-quarter earnings report, Kodak’s management raised serious concerns about its ability to continue operating over the next year. The warning stems from roughly $500 million in debt maturing within 12 months and the lack of committed financing to cover those obligations. Without new funding or successful refinancing, the company could default, they said. 

The note’s stark language sent Kodak’s shares tumbling, sliding 21% to $5.43 as of Wednesday morning. 

Deep strains in earnings

For the second quarter ended June 30, Kodak booked $263 million in revenue, which was down 1% from a year earlier. However, the real blow came from the bottom line: Profitability took a sharp hit compared to last quarter, with gross profit sinking 12% to $51 million, squeezing Kodak’s margins from 22% to 19%. What had been a $26 million profit in the same period last year flipped 180 degrees to a $26 million loss. Operational EBITDA slipped to $9 million from $12 million, as significantly lower sales volumes and surging manufacturing costs overwhelmed relatively modest price increases.

Cash reserves also slimmed down. Kodak ended the quarter with $155 million on hand, just $70 million of it in the U.S. That’s $46 million less than it had in December, drained by rising costs, and weaker operating results.

Chief financial officer David Bullwinkle said in the note the company is counting on a somewhat random source of liquidity: terminating its U.S. Kodak Retirement Income Plan and using excess assets to pay down debt. Kodak said it expects clarity by mid-August on how it will settle obligations to plan participants, and aims to complete the process by December.

Dave Zhang, a printing industry expert from analyst group WhatTheyThink, said Kodak’s pain isn’t unique.

“Every major equipment manufacturer in commercial printing is feeling the same squeeze this year, in the U.S. and in Europe,” Zhang told Fortune. “Customers are holding back on big buys unless they absolutely have to. Tariffs and economic uncertainty aren’t giving them the warm-and-fuzzy to invest.”

Kodak’s long fall

Founded by George Eastman in the late 19th century, Kodak revolutionized photography by democratizing film, making cameras affordable for the masses. Its slogan—“You push the button, we do the rest”—became synonymous with convenient sentimentality. At its peak in the 1970s, Kodak controlled nearly 90% of U.S. film sales and 85% of the camera market. 

Then the digital revolution upended the industry, and Kodak stumbled. In a twist of irony, it was a Kodak engineer who created the first digital camera—but, fearing the innovation would cannibalize their current product, the company sat on the invention. They bet on film being a source of nostalgia, even as digital cameras took over the market with a promise of even more convenience. 

By 2012, saddled with billions in debt, Kodak filed for Chapter 11 bankruptcy. However, Zhang traced the decay back even earlier, to the mid-2000s, when then-CEO Antonio Pérez “basically decimated” Kodak’s chemical and film manufacturing—“the company’s roots”—laying off tens of thousands and selling off or destroying key facilities.

“Don’t throw out the baby with the bathwater,” Zhang warned. “They blew their future.”

When current CEO Jim Continenza took over, his job was to steer Kodak out of bankruptcy and rebuild its core.

“It’s not just about nostalgia film,” the analyst said. “They’ve had to rebuild a film line from scratch—equipment you can’t just order on Amazon—and now they’re at full manufacturing capacity.”

Kodak’s film output today includes industrial products like films for automotive components, not just 35mm rolls.

Additionally, Kodak shifted from its consumer camera business to focus on commercial printing, packaging, and specialty chemicals. 

In recent years, it has sought growth in advanced materials, including film for the movie industry and components for pharmaceuticals. In fact, the pharmaceutical pivot was so successful that the day Kodak secured a government loan to pursue manufacturing, their stock soared so quickly it broke circuit breakers. 

Kodak has also leaned into nostalgia with hundreds of brick-and-mortar retail stores, which are particularly popular internationally. Despite the brand’s trendiness, Timothy Calkins, a marketing professor at the Kellogg School of Management at Northwestern University, told The New York Times he found the trademark licensing “striking’” and “sad,” suggesting a sense of desperation in the Kodak brand.

An uncertain path forward

Kodak does have one bright spot from its second-quarter earnings: its Advanced Materials & Chemicals division saw revenue grow, and  the company also recently secured FDA registration for a new pharmaceutical manufacturing facility, allowing it to produce regulated products. 

CEO Jim Continenza framed the development as part of Kodak’s transformation into a manufacturer with diversified products. 

“We continue to accelerate the growth of our Advanced Materials & Chemicals business,” he wrote in the earnings release, adding that U.S. manufacturing capacity could help shield Kodak from potential tariff shocks.

The question is whether that shield will be strong enough. The going-concern disclosure, near the end of the earnings report, makes clear that Kodak’s plans to right the ship—pension reversion, debt restructuring, and refinancing—are not entirely within its control. U.S. accounting rules require such a warning when management cannot conclude those steps are “probable.”

“They need time and money,” Zhang said. “Time is hard to get, but if they can get the money, they might just rebuild this thing.”

For now, investors are wondering if the company can improbably reinvent itself for the second, third, or fourth time, or if this is the long-awaited fade-out of a company that once defined how the world captured its memories.

This story was originally featured on Fortune.com

© Fairfax Media—Getty Images

A Cincinnati judge has ordered former Kroger CEO Rodney McMullen to explain—in writing—why he unexpectedly resigned in March, forcing him to confront what his attorneys call “completely irrelevant” and “embarrassing” questions in a lawsuit involving singer Jewel.

McMullen, who led the Cincinnati-based grocery giant for more than a decade, resigned following what Kroger described as an investigation into his “personal conduct.” As part of his departure, McMullen forfeited all of his unvested equity and bonuses—a total of $11 million, according to an SEC filing. 

That decision raised eyebrows for Eric Chaffee, a corporate law professor at Case Western Reserve University. “Usually a CEO has downside protection if they leave,” he told Fortune. “The fact that he was willing to give that up may provide some insight that what went on here was something he did not want revealed.”

Kroger offered no further explanation at the time, sparking speculation in business circles. However, the mystery is now back in the spotlight due to an unrelated lawsuit filed against Kroger by singer-songwriter Jewel, and one of her business partners, over Kroger’s annual Wellness Festival. The plaintiffs claim they played a key role in launching the festival and are seeking damages over alleged contractual disputes. 

Their attorneys argue that questioning McMullen about the reasons for his resignation could be relevant to his credibility as a trial witness, and could shed light on the “allegedly corrupt corporate culture at Kroger.”

McMullen’s legal team has fought the request, but earlier this month, Hamilton County Common Pleas Court Judge Christian Jenkins ordered him to submit a written explanation by Aug. 8, including the names of those involved. Whether the public ever sees that document is still uncertain. If Jenkins decides the information is relevant, it could be kept under seal. If it’s not deemed relevant, it won’t be entered into the record at all.

While prying into a CEO’s exit is “somewhat invasive,” Chaffee noted the court could find it justified, especially since Kroger itself tied the resignation to “business ethics.” 

In litigation, he explained, “If the other side offers a witness, you want to test that individual’s credibility… to figure out whether they behave in an ethical manner.”

That relevance test weighs heavily against another legal principle: the risk of unfairly embarrassing a witness. But Chaffee noted that in the U.S., there’s a “strong preference that the public has access to judicial proceedings—not just to be nosy, but because transparency makes for a fairer legal system.”

That principle may prevail. However, for Kroger, keeping the reason private could protect its brand and stave off shareholder lawsuits or regulatory scrutiny.

“There’s a cloud that’s left by his departure,” Chaffee said, “but companies sometimes decide that’s better than the damage that could come from disclosure.”

McMullen likely has his own reasons for staying quiet, Chaffee added. 

“It might be something embarrassing to him personally, to a family member, or something that could have future repercussions for his career,” he said. “If you’re a CEO and there are news reports out there that you’ve done something you shouldn’t have, getting another top job can become very, very difficult.”

While Chaffee doesn’t expect the case to set legal precedent—“this is probably more factually interesting than it is legally interesting”—he said the stakes are still high. 

The plaintiffs’ strategy, he noted, is a common but effective pressure tactic: “Seeking information that may potentially be damaging to Kroger… may incentivize them to settle this case.”

This story was originally featured on Fortune.com

© Patrick T. Fallon / AFP—Getty Images

For more than two decades, AriZona’s iconic 99-cent iced tea has shrugged off pandemics, recessions, and supply shocks. Now, President Donald Trump’s new 50% aluminum tariffs could finally crack its unshakable price tag. 

AriZona Iced Tea uses about 100 million pounds of aluminum for its signature cans, about 20% of which comes from Canada. Founder and chairman Don Vultaggio told the New York Times that unless Trump strikes a deal to lower the new aluminum levy with Canada, the company may be forced to raise prices. 

“I hate even the thought of it,” Vultaggio told The Times.  “It would be a hell of a shame after 30-plus years.”

The founder has made headlines for refusing to hike the price of his tea, even as inflation drives the prices of all other goods up. If Vultaggio adjusted the price of AriZona iced tea to match rising input costs, the tea would cost $1.99 today. Yet, the billionaire didn’t see a point. 

“We’re successful. We’re debt-free. We own everything. Why?,” Vultaggio said in an interview with Today in June. “Why have people who are having a hard time paying their rent have to pay more for our drink?” 

Vultaggio has tried other workarounds to save money on aluminum, including downsizing the can from 23 ounces to 22 ounces. Even that decision weighed on him. 

Now, the founder worries the price of aluminum, which he said has “dramatically bumped up” because of the tariffs, might be the final blow to the 99-cent cans. 

A test case for U.S. manufacturing

AriZona’s predicament could be a test case for what happens when a domestic manufacturer—one that’s nearly fully vertically integrated, even owning the railroad tracks its trains use to ship sugar daily—gets punished for importing some of its materials. 

PNC’s Chief Economist Augustine Faucher told Fortune he thought the aluminum tariffs were unnecessary and inefficient. 

Canada, which has access to abundant and inexpensive hydroelectric power, is one of the world’s leaders in aluminum production. Given the higher input costs of making aluminum in the U.S., importing it will always be cheaper than producing it domestically, he said.

“It’s going to be difficult to completely avoid tariffs, and that’s likely to contribute to higher consumer inflation in the near term as these companies pass along some of their higher input prices,” he said. 

Faucher said companies like AriZona have few ways to blunt the impact. Unlike industries with slow turnover, which can stock up on inventory before the tariffs hit, beverage makers move product quickly. That means the aluminum tariffs will immediately hit the company’s bottom line.

All the price pain comes with very little gain, Faucher noted. Companies like AriZona, which imports some aluminum but produces the rest of the product domestically, might decide to just package the product overseas to avoid the duty. 

“The idea is to help American manufacturers, but this hurts American manufacturers who use these types of imported inputs,” Faucher said. 

The economist said he doesn’t see a need for the United States to have a strong domestic aluminum industry at all. 

“It makes sense over the long-run to specialize in areas where the United States does well,” Faucher said. “But given the energy costs associated with aluminum production and getting bauxite and all that kind of stuff, it just doesn’t make sense for the industry to be located in the United States.” 

This story was originally featured on Fortune.com

© Roy Rochlin—Getty Images for AriZona Iced Tea

Former Bureau of Labor Statistics (BLS) Commissioner William Beach—a Trump nominee—said every number on the jobs chart President Donald Trump touted in the Oval Office on Thursday was wrong.

Still bitter over last week’s “rigged” jobs report, which showed weaker-than-expected job growth, Trump convened an impromptu press conference Thursday evening to showcase graphs with what he called “all-new numbers.”

Stephen Moore, a Heritage Foundation economist, said during the press conference that the numbers justified Trump’s firing of former BLS Chief Erika McEntarfer. He estimated that over the last two years of President Joe Biden’s administration, the BLS overestimated job creation by 1.5 million jobs. 

In an interview with Fortune, Moore said he disagreed with the president that the numbers were rigged on purpose. He never met McEntarfer, he explained, but said it was “suspicious” that the jobs numbers published right before the election were eventually revised. 

That suspicion formed the basis for the chart Moore brought to the Oval Office, which showed three bars: the benchmark revisions, the monthly revisions, and the total estimated jobs growth from 2024. 

Beach—who Moore said he’s known for 30 years and calls a “good friend” —called those numbers “the strangest thing in the world.” 

“He should have known better than to do that,” Beach said. 

Beach found problems across the board.

The first bar—labeled as an August jobs revision—used a preliminary estimate that was later revised downward in February, meaning the number on the chart didn’t match the official final figure, Beach said. 

Moore countered that Beach misunderstood his method. He said the team was comparing the initial “headline” jobs numbers released each month to the final revised and benchmarked numbers, and summing those differences, rather than simply pulling the final August correction.

Beach also argued the benchmark revision figure on the chart was incorrect and didn’t align with BLS’s published data. The last bar, labeled “total revisions,” was mathematically flawed, he said, because it added benchmark revisions to monthly revisions, even though the benchmark already incorporates those monthly changes—“like counting the same apple twice and pretending you had two.” 

Moore rejected the idea that this was double-counting, saying he was capturing separate steps in the revision process.

Additionally, during the press conference, Moore said the income figures came from unpublished Census Bureau data; Beach says that makes them unverifiable. Moore told Fortune his team developed an algorithm to estimate those income numbers in advance with what he claims is 97% accuracy, and plans to publish a report explaining the method.

Perhaps the largest disagreement between the two longtime friends is philosophical. While Moore claimed he didn’t believe the numbers are rigged, he also said the positive revisions for Biden “raised eyebrows,” and emboldened the president to argue the BLS was corrupted. 

Beach couldn’t fathom this conspiracy. When he led the BLS from 2019 to 2023, he personally saw the decentralized nature of the process and the “hardheaded” loyalty of the statistics that pored over hundreds of pieces of data. Each person in the BLS role has such a particular job, that it was hard to imagine how they could conspire to push the jobs data in one direction or another.

“I mean, there’s a person at BLS who specializes in drinking-places data,” Beach laughed. 

Trump’s suspicions are more than just puzzling, Beach said. They were also “highly dangerous.” Markets rely so heavily on trust in the jobs report data, he said, that the damage from Trump’s words and actions has likely already happened. 

Drawing on his experience in the private sector, he explained that uncertainty in some metrics forces business leaders to widen their “margin of error” when making investments, which can kill deals. If companies doubt the accuracy of federal statistics, he warned, they’ll eventually turn to alternative measures.

Rather than blaming the messenger, or sowing unnecessary doubt, Beach emphasized that many issues with the statistical data could be solved by modernization. 

“I served two years as the chief statistician of the United States, as well as the BLS Commissioner,” Beach said. “So I know how the system is weakened, and it’s been weakened over time by lack of attention by Congress and lack of modernization. So there are many things to be done.” 

He hoped Moore would be able to find an opportunity to explain his statistical discrepancies better. Moore has always had a different way of constructing numbers, something that Beach said he has benefited from. 

“But sometimes, he doesn’t really get engaged with a topic at the time it’s important for him to make that engagement,” Beach said. “And I think this, this is a case in point.” 

This story was originally featured on Fortune.com

© Yuri Gripas / Abaca / Bloomberg—Getty Images

Four former Intel board members are backing President Donald Trump’s surprise attack on the company’s CEO, but they are pushing for a shake-up that is both more dramatic and wholly in line with their vocal criticism of late.

In a rare collective statement provided exclusively to Fortune, the former directors said the fate of CEO Lip-Bu Tan should be decided by Intel shareholders and its board, but called for a radical restructuring that would spin off Intel’s manufacturing arm into an independent company to secure America’s chipmaking dominance.

The group of former Intel board members—Charlene Barshefsky, Reed Hundt, James Plummer, and David Yoffie—pointed out that the company is on its fourth CEO in seven years with little improvement in results. They argued that only a dramatic break could restore Intel’s competitiveness and protect U.S. national security interests, with a rescue plan focused specifically on emancipating Intel’s “Foundry” business, the manufacturing assets in which Intel produces semiconductor chips for its own products and for third-party customers. These advanced chip fabrication facilities are increasingly top of mind for President Donald Trump, his Chinese counterpart, Xi Jinping, and the entire tech industry, watching as the drama unfolds.

Intel was long the leader in chips but has fallen behind Nvidia, TSMC, and other players in recent years, as Barshefsky, Hundt, Plummer, and Yoffie argued in the pages of Fortune. Intel has two main businesses, one being the Foundry and the other, called simply Intel Products, which includes its flagship PC and server microprocessors, as well as networking equipment and software. Both are essential for computing, but only the Foundry is key to national security, which has been a key point in trade talks between Trump and Xi. The group of former directors argued that splitting the chips manufacturing entity from the rest of Intel would directly address both market competitiveness and the nation’s strategic need for advanced semiconductors.

The group called for Intel shareholders to insist on the split, which would create a new, independent manufacturing entity, with its own CEO and board. To make the new company competitive with TSMC, the former directors called for remaining funds under the CHIPS Act to go toward supporting the company and to help “persuade American design firms to place orders.” That would position the new company as an alternative to TSMC, “both for cutting-edge chips needed for data-center and other commercial purposes and for national security requirements.”

Mounting pressure

The statement comes as pressure on Intel intensifies, after President Donald Trump publicly called for CEO Lip-Bu Tan’s resignation over his “conflicted” status and alleged ties to Chinese technology firms. Trump’s demand, posted on Truth Social Thursday morning, sent shock waves through U.S. tech circles and drew swift responses from the company. 

Tan responded in a letter to staff, posted publicly on Intel’s website, claiming there has been “misinformation” about his career and past leadership roles. The embattled CEO said that Intel is “engaging” with the Trump White House to “address the matters that have been raised and ensure they have the facts.” He added that he fully shares the president’s commitment to advancing U.S. national and economic security. 

President Trump’s intervention followed Sen. Tom Cotton’s warnings over reports of Tan’s prior investments in Chinese firms, some allegedly tied to China’s military. Trump’s demand for an immediate CEO change provoked a 3% drop in Intel’s stock Thursday, compounding board-level discord and market concerns about the company’s stagnation and loss of ground to rivals such as Nvidia and AMD.

In his note to staff on Thursday, Tan defended his integrity and claimed the current board was “fully supportive” of the work currently underway at Intel, while insisting that throughout his four decades in the industry, he has “always operated within the highest legal and ethical standards.”

Intel did not immediately respond to a request for comment.

In a previous statement to Fortune, however, the company pushed back on criticism, saying its board and CEO are “deeply committed to advancing U.S. national and economic security interests” and were making “significant investments aligned with the President’s America First agenda.”

Intel noted it has been manufacturing in the U.S. for 56 years and is investing billions of dollars in domestic semiconductor R&D and manufacturing, including a new Arizona fab that will run the most advanced process technology in the country. The company added that it was “the only company investing in leading logic process node development in the U.S.” and said it looked forward to “continued engagement with the Administration.”

Correction, Aug. 8, 2025: A previous version of this story incorrectly stated that the four former directors called for the ouster of Intel’s CEO. The group of former directors said that Intel shareholders should make the decision about the CEO.

This story was originally featured on Fortune.com

© Annabelle Chih—Bloomberg/Getty Images